The importance of Guanxi for companies seeking to win business in China varies depending on the sector. Trying to secure shelf space for beer? Guanxi is pretty important. Trying to win a $10MM semiconductor deal at Huawei? Not as important.
I found that merit counts more than Guanxi when selling high tech to big companies in China. Every time we thought we could win based on Guanxi, we lost.
Microsoft, and Bill Gates, are an exception. Hu Jintao visited the U.S. in April and had dinner at two places – The White House and Bill Gates House. While there, he uttered some famous words:
â€œBill Gates is a friend of China, and I am a friend of Microsoft,â€
Nine out of ten copies of Windows in China are pirated. That makes the following statistic, courtesy of Reuters, all the more important.
Some 48 percent of PCs shipped in China in the three months through March came with legal copies of Windows already installed, compared with 25 percent in the fourth quarter of 2005, according to figures supplied to Reuters on Thursday by data tracking firm International Data Corp. (IDC).
Legitimizing software in China represents a huge untapped revenue source for Microsoft. And they’ve got the Guanxi to make it happen.
Observers believe the Chinese vendors signed their deals with Microsoft in April under pressure from Beijing, which is trying to show it is making serious efforts to stamp out piracy — a major complaint from many Western governments.
In late March, the Chinese government went so far as to issue a decree requiring PC makers to install a licensed operating system on each machine before it left the factory.
Hat Tip – China Economic Review